Shares of cryptocurrency exchange Coinbase (COIN) rose 12% on Friday despite missing expectations for its fourth-quarter earnings, as analysts reacted to the report with a mix of caution about short-term pressures and optimism about the company’s evolving business model.
The company reported net income of $1.71 billion, missing Wall Street expectations of $1.81 billion, while its core operating profit (adjusted EBITDA) of $566 million was below consensus estimates of about $653 million.
Coinbase reported a generally accepted accounting principles (GAAP) net loss of $667 million, primarily due to $718 million in unrealized losses on its cryptocurrency portfolio and $395 million in losses on strategic investments.
Barclays analyst Benjamin Budish called the fourth quarter a “miss across the board,” citing weak trading and subscription revenue while operating expenses were higher than expected. Budish lowered his price target to $149 from $258, writing that trading activity, stablecoin-related interest income and crypto asset prices still accounted for the majority of Coinbase’s results.
Still, he acknowledged encouraging trends, including Coinbase’s rising share of USDC’s market capitalization, Coinbase One’s growing user base, and continued share buybacks, which have reduced the share count by about 8% month-on-month.
Benchmark’s Mark Palmer also expressed a more optimistic long-term view. While overall performance fell short, Palmer pointed to Coinbase’s growing derivatives business, expanding product suite and adoption of stablecoins as evidence that the company is becoming more “diversified and durable.” He maintained a buy rating on the stock but cut his price target in half from $421 to $267.
Clear Street’s Owen Lau noted that Coinbase’s consumer monetization is under pressure, with retail adoption falling from 1.43% in the third quarter to 1.31% in the fourth quarter. This decline was driven by the shift to advanced trading tools and the Coinbase One subscription model, resulting in lower revenue per trade, partially offset by stronger engagement and cross-selling. He lowered his price target to $277 from $344, citing a prolonged downturn in the cryptocurrency market, weak retail participation and a more hawkish macro backdrop.
Despite the weak performance, Lau said Coinbase’s long-term positioning looks stronger. The company currently has 12 business lines with annual revenue exceeding $100 million, including two business lines with annual revenue exceeding $1 billion. He said its base layer network, derivatives platform and growing stablecoin infrastructure show signs of broader use beyond trading.
After the report was released, JPMorgan Chase also lowered its price target for COIN, citing near-term earnings pressure.
Nonetheless, Coinbase reiterated its commitment to maintain positive adjusted EBITDA throughout market cycles, supported by $14.1 billion in total available resources. Management says it will continue to buy back shares and accumulate Bitcoin Use a portion of operating income.
